New nanny wants to be accountable for own tax and NI. Is that ok?

Question

Have hired a new p/t nanny. She wants to be accountable for her own tax and NI contributions. Is that going to be ok?

Answer 1

If she wants to be self employed that is fine, I would recommend that you hand her wage reciepts and have a copy yourself and inform the tax office of her details including national insurance details at the end of every tax year to cover your own back as it shounds as if she is trying to work cash in hand which is illegal and which you would also be responsible for.

Answer 2

Only if she sets up being a nanny as a business and gives you invoices for her time.

otherwise you will be liable to pay some tax on her behalf if the inland revenue deem her as your employee.

Answer 3

David W. is spot on.

Forget any recommendations that she could be paid as self employed.

The Revenue will view her as employed. If you don't operate PAYE correctly on  her pay then  YOU will be in trouble.

You have been warned.

Answer 4

If there's nothing legally to stop you from employing her as a freelancer (which, unless you're a company with staff, is unlikely), then that's fine- it's probably easier for you.

It's then up to her to sort out her own NI and make sure her tax is paid. If you think that she's trying to dodge tax or anything, well that's really between her and the tax office and shouldn't affect you, you will just be a customer to her 'business'.

Answer 5

Like everything to do with income tax and national insurance it's more complicated than it shoudl be.  if she has set herself up as a limited liability company, i.e. a company then she shoudl be able to supply you with invoices and you would just pay them (providing they are correct) and she/her company would be responsible for deducting tax, national insurance (both employers and employees.)  If you direct her in her day to day work then it's likely that HMRC would consider her to be employed by you in which case you are responsible to deduct income tax and national insurance.

Answer 6

Ask the I.R. As an employer you could be considered to be assisting in tax fraud if it should occur.

Answer 7

Only if she is registered as self employed, she will have documentation to prove this. Otherwise you could be in trouble for not taking the neccessary checks,

Answer 8

People can't just decide to be employed or self-employed. Certain criteria have to be met in either case. I would suggest you contact the Status Inspector of Taxes, via your local tax office, who will give a ruling.

If you get it wrong, you may find yourself liable to pay all her tax and National Insurance, in addition to other financial penalties.

Just as a matter of interest, when I was working, the only nannies I came across were employed. It could depend on whether she is working on your premises or hers, using your equipment or hers, if she stands the risk of making a financial loss, if she decides the hours she works, if she can sub-contract out the work to someone else, if she gets holiday and sick pay. That will be the sort of criteria considered.